Senate finance releases income and entities option paper - no, Goodlatte didn’t pull the plug on online sales tax - Grassley has a few more questions - The one nice thing about the metro

SENATE FINANCE RELEASES INCOME AND ENTITIES OPTION PAPER. The Senate Finance Committee released an options paper late yesterday that outlines tax reform options for individual and business incomes taxes and payroll taxes. The document was released after committee members gathered for their eighth weekly meeting on overhauling the tax system. The paper explores options for reducing or eliminating the different tax treatment of debt and equity and for applying an equitable tax system to corporations and passthroughs — businesses that file taxes through the individual code. The paper outlines three possible ways that lawmakers could integrate individual and corporate taxes, including treating the corporate tax as a withholding tax on dividends for shareholders and adjusting capital gains taxes for businesses to match the individual side of the code. “A general goal in tax policy is that similarly situated taxpayers should be taxed in a similar manner. However, different types of entities often pay tax at very different rates. For example, the earnings of a C corporation are subject to two levels of tax, while a single level of tax applies to the earnings of passthrough businesses. As discussed, this does not necessarily mean that the earnings of C corporations are taxed more heavily than the earnings of passthrough businesses,” the paper reads. The financial products section focuses on finding long-term solutions to taxing derivatives, including mandates that holder mark-to-market the derivative annually. The paper: http://bit.ly/19NBMxK

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WHERE DO WE GO FROM HERE? For the first time in nearly a month, the news of the day was not the Internal Revenue Service — despite an at times rancorous House Oversight hearing yesterday. David Nather has a smart piece on the takeaways from the nearly five-hour hearing, including insights on how attention on the scandal could be ever-so-slightly fading as other news explodes. “Darrell Issa and his committee pressed ahead anyway — and they got in plenty of shots at the IRS and its apparent fall guy, Faris Fink, even as the rest of Washington was consumed by the newest scandal: the National Security Agency’s phone tracking scheme. There were actually a few lessons to learn. The agency couldn’t even keep track of all its expenses, and Fink — the IRS official who played Spock in the infamous “Star Trek” video — never really pinpointed the moment when he realized the millions in spending on a 2010 conference was over the top.” Read the full piece: http://politi.co/193nt9r

NO, GOODLATTE DIDN’T PULL THE PLUG ON ONLINE SALES TAX. Well this headline was eye-popping: WSLS: ‘Goodlatte says House likely won't pass Senate's Internet sales tax bill.’ If true, House Judiciary Committee Chairman Bob Goodlatte’s sudden reversal would be a huge blow for supporters of the Marketplace Fairness Act who have labored more than a decade to give states the ability to collect sales taxes from out-of-state online retailers. But the story was far from true, the Virginia Republican’s office quickly countered. “I have previously stated that I have serious concerns regarding the Marketplace Fairness Act passed by the Senate. However, as clearly stated in a statement on the House Judiciary Committee’s website, I am open to considering legislation concerning this topic and the House is working on alternatives to the bill passed by the Senate,” Goodlatte said in a statement. The legislation is still awaiting action from Goodlatte’s panel and is not currently scheduled for a hearing or markup. Goodlatte told your Morning Tax-er earlier this week that he hasn’t yet drafted alternative legislation to present to the committee. The original WSLS story: http://bit.ly/13Ja2pz

BON VOYAGE. Your Morning Taxer is taking the weekend off for some R&R on the wonderful beaches of Florida. But don’t worry I’ll be back on Wednesday — and you can always check my whereabouts with the NSA if it is urgent. In my absence, please contact ssloan@politico.com with tax tips or Morning Tax leads. If you need to reach me I’ll be at lfrench@politico.com. Or tweet me at @ LaurenNFrench. As always, please follow @ POLITICOPro.

HOUSE: Taking a five-day weekend.

SENATE: Convenes at 9:30 a.m.

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GRASSLEY HAS A FEW MORE QUESTIONS. The answers supplied by Michael Froman, the nominee to lead the U.S. trade office, did little to quell Sen. Chuck Grassley’s concerns about the reported $500,000 in offshore investments held by the nominee. Froman detailed to lawmakers yesterday that he has paid all U.S. taxes on the investment but the Iowa Republican will send a letter asking for more information, including what questions the White House ask Froman about the Caymans Islands investments in 2009. Grassley also asked Froman if he was aware “that Citigroup was about to receive a multibillion-dollar federal guarantee” when the former employee accepted his bonus.

501(C)4s GETTING THE NEW YORKER TREATMENT. From Byron Tau: “State Attorney General Eric Schneiderman this week moved to force all nonprofits — also called 501(c)(4)s — participating in politics in New York to disclose their donors, just like PACs, super PACs and candidates for office. ‘It seems to be that the only reason in the post- Citizens United world to use a 501(c)(4) instead of a super PAC — which enables you to spend all the money you want in support of or opposition to a candidates — is to conceal your identity,’ Schneiderman told POLITICO. It’s the first major push anywhere in the country to crack down on political nonprofits — even if it only applies to groups operating in New York state.” http://politi.co/10V5jm6

THE ONE NICE THING ABOUT THE METRO. Two New York Republicans teamed up with Democrats from Massachusetts and Oregon to introduce legislation maintaining a tax break for mass transit commuters. The tax credit of $245 for mass transit users will fall to $125 on New Year's Day without the fix, putting mass transit users at a disadvantage compared with car commuters. The credit, which isn't a permanent part of the tax code, needs to be renewed on a regular basis. The bill's sponsors are Reps. Michael Grimm, Peter King, James McGovern and Earl Blumenauer.

AN OFFSHORE HEARING. The House Ways and Means Committee will hold a hearing on tax havens and base erosion by U.S. companies, Chairman Dave Camp announced. The June 13 hearing at 10 a.m. will focus on multinationals’ use of low- and no-tax jurisdictions to hide profits abroad. “The use of tax havens as part of corporate tax avoidance strategies narrows the U.S. tax base and requires other taxpayers to pay higher rates on both domestic and overseas income. There is widespread agreement amongst academics, economists and lawmakers that these practices are both unfair to taxpayers who aren’t able to engage in these strategies and harmful to the U.S. economy,” Camp said in a statement. Camp has previously released an option paper focused on international taxation that supported a move toward a territorial tax system — where profits earned abroad by American companies are mostly left untaxed.

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Authors:

About The Author

Lauren French covers Congress for POLITICO.She is also one of the authors of Huddle – a must-read morning tip sheet covering congressional news. Lauren is focused on House Democrats and conservative Republicans. She previously covered congressional tax policy and the IRS.Before joining POLITICO, she was an intern with Reuters covering national security and foreign policy and with McClatchy and The Houston Chronicle.She graduated from The George Washington University in 2012 with a major in journalism, but truly received her education as a two-term editor-in-chief for The GW Hatchet. She currently lives in D.C.French hails from both Illinois and Florida, where she enjoys paddle boarding and water sports. She is learning to cook and puts hot sauce on everything.